Kaufman Bros. Downgrades Comcast (CMCSA) to Hold; Value Trap
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Kaufman Bros. downgrades Comcast (Nasdaq: CMCSA) from Buy to Hold. Price target to $17 from $18
Kaufman analyst says, "Uncertainty about the NBCU deal, the distraction it would place on Comcast, and the potential drag on FCF over the long term to ultimately purchase GE's remaining interest in NBCU are weighing on the stock and creating what looks like a value trap. As a result, we are increasing the equity risk premium in our WACC calculation for Comcast to 11% from 10%. This 100 basis point increase results in a reduction in the terminal multiple of our DCF analysis to 9.0x from 10.0x and an increase in our discount rate to 14% from 13%...We look for Comcast to report 2009 total revenue of $35.6 billion (up 4% y/y), total EBITDA of $13.9 billion (up 6% y/y), and EPS of $1.16 (up from $0.85 in 2008)."
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Comcast Corporation, together with its subsidiaries, provides cable services in the United States.
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